Question 1

An overseas affiliate of a U.S.MNC can be organized

Accepted Answer

A) as a branch. 
B) as a subsidiary. 
C) as a branch,as well as a subsidiary. 
D) none of the options 
A) as a branch. 
B) as a subsidiary. 
C) as a branch,as well as a subsidiary. 
D) none of the options

Question 2

The underlying principle of tax equity is that

Accepted Answer

A) all similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
B) all similarly situated taxpayers should participate in the cost of operating the government on an equal basis. 
C) none of the options 
A) all similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
B) all similarly situated taxpayers should participate in the cost of operating the government on an equal basis. 
C) none of the options

Question 3

Transfer pricing can have an effect on how divisions of an MNC are perceived by the local banks.Which transfer price would leave a local affiliate that imports components from the parent with less impressive financial statements?

Accepted Answer

A) High transfer price 
B) Low transfer price 
C) none of the options 
A) High transfer price 
B) Low transfer price 
C) none of the options

Question 4

Tax neutrality

Accepted Answer

A) has its foundations in the principles of economic efficiency and equity. 
B) can be a difficult principle to apply in practice. 
C) is determined by three criteria: capital export neutrality,capital import neutrality and national neutrality. 
D) all of the options 
A) has its foundations in the principles of economic efficiency and equity. 
B) can be a difficult principle to apply in practice. 
C) is determined by three criteria: capital export neutrality,capital import neutrality and national neutrality. 
D) all of the options

Question 5

Using transfer prices "creativity" MNCs can

Accepted Answer

A) try to move blocked funds (but the host country might be watching). 
B) evade tax liabilities (but the host country might be watching). 
C) try to move blocked funds (but the host country might be watching),as well as evade tax liabilities (but,again,the host country might be watching). 
D) try to move blocked funds (but the host country might be watching),as well as evade tax liabilities (but,again,the host country might be watching).There's nothing that the host country government can do about it. 
A) try to move blocked funds (but the host country might be watching). 
B) evade tax liabilities (but the host country might be watching). 
C) try to move blocked funds (but the host country might be watching),as well as evade tax liabilities (but,again,the host country might be watching). 
D) try to move blocked funds (but the host country might be watching),as well as evade tax liabilities (but,again,the host country might be watching).There's nothing that the host country government can do about it.

Question 6

Fundamentally,there are two types of tax jurisdiction.

Accepted Answer

A) The worldwide and the territorial 
B) The residential and the visiting 
C) The passive and the active income 
D) The earned and the unearned 
A) The worldwide and the territorial 
B) The residential and the visiting 
C) The passive and the active income 
D) The earned and the unearned

Question 7

Assume that a product has the following three stages of production: $\begin{array}{cc}
\text { Production Stage } & \text { Selling Price } \
1 & € 10 \mathrm{C} \
2 & € 250 \
3 & € 75 \mathrm{C}
\end{array}$ If the value-added tax (VAT)rate is 25 percent,what would be the VAT over all stages of production?

Accepted Answer

A) €187.50 
B) €120 
C) €150 
D) €225 
A) €187.50 
B) €120 
C) €150 
D) €225

Question 8

If U.S.taxing authorities did not limit the amount of the foreign tax credit to the equivalent amount of the U.S.tax

Accepted Answer

A) payers would arguably subsidize part of the tax liabilities of U.S.MNC's foreign earned income. 
B) national neutrality would suffer. 
C) MNCs would all depart our shores. 
D) all of the options 
A) payers would arguably subsidize part of the tax liabilities of U.S.MNC's foreign earned income. 
B) national neutrality would suffer. 
C) MNCs would all depart our shores. 
D) all of the options

Question 9

Capital export neutrality

Accepted Answer

A) is a goal based on worldwide economic efficiency. 
B) is an example of Mercantilism. 
C) is based on host country economic efficiency. 
D) is based on MNC home country economic efficiency. 
A) is a goal based on worldwide economic efficiency. 
B) is an example of Mercantilism. 
C) is based on host country economic efficiency. 
D) is based on MNC home country economic efficiency.

Question 10

Many countries have tax treaties with one another.These generally specify

Accepted Answer

A) the withholding tax rate applied to various types of passive income. 
B) that withholding tax rates imposed through tax treaties are bilateral. 
C) the two countries agree to impose the same tax rate on the same category of income. 
D) all of the options 
A) the withholding tax rate applied to various types of passive income. 
B) that withholding tax rates imposed through tax treaties are bilateral. 
C) the two countries agree to impose the same tax rate on the same category of income. 
D) all of the options

Question 11

The term "capital-import neutrality" refers to

Accepted Answer

A) the criterion that an ideal tax should be effective in raising revenue for the government and not have any negative effects on the economic decision-making process of the taxpayer. 
B) the fact that taxable income is taxed in the same manner by the taxpayer's national tax authority regardless of where in the world it is earned. 
C) the criterion that the tax burden a host country imposes on the foreign subsidiary of an MNC should be the same regardless in which country the MNC is incorporated and the same as that placed on domestic firms. 
D) the underlying principle that all similarly situated taxpayers should participate in the cost of operating the government according to the same rules. 
A) the criterion that an ideal tax should be effective in raising revenue for the government and not have any negative effects on the economic decision-making process of the taxpayer. 
B) the fact that taxable income is taxed in the same manner by the taxpayer's national tax authority regardless of where in the world it is earned. 
C) the criterion that the tax burden a host country imposes on the foreign subsidiary of an MNC should be the same regardless in which country the MNC is incorporated and the same as that placed on domestic firms. 
D) the underlying principle that all similarly situated taxpayers should participate in the cost of operating the government according to the same rules.

Question 12

There are three basic types of taxation that national governments throughout the world use:

Accepted Answer

A) income tax,withholding tax,and value-added tax. 
B) property tax,wealth tax,and death tax. 
C) import quotas,duties,and tariffs. 
D) tariffs,ad valorem taxes,and income taxes. 
A) income tax,withholding tax,and value-added tax. 
B) property tax,wealth tax,and death tax. 
C) import quotas,duties,and tariffs. 
D) tariffs,ad valorem taxes,and income taxes.

Question 13

A controlled foreign corporation (CFC)is

Accepted Answer

A) a foreign corporation established as an affiliate of a U.S.corporation for the purpose of "buying" from the U.S.corporation property for resale and use abroad. 
B) a foreign subsidiary that has more than 50 percent of its voting equity owned by U.S.shareholders. 
C) a separate domestic U.S.corporation actively engaged in business in a U.S.possession (Puerto Rico and the U.S.Virgin Islands). 
D) one that has no "overall limitation" in regards to its foreign tax credits. 
A) a foreign corporation established as an affiliate of a U.S.corporation for the purpose of "buying" from the U.S.corporation property for resale and use abroad. 
B) a foreign subsidiary that has more than 50 percent of its voting equity owned by U.S.shareholders. 
C) a separate domestic U.S.corporation actively engaged in business in a U.S.possession (Puerto Rico and the U.S.Virgin Islands). 
D) one that has no "overall limitation" in regards to its foreign tax credits.

Question 14

The organizational form of an MNC can affect the timing of a tax liability.This means

Accepted Answer

A) the principle of tax equity might be violated. 
B) as long as,regardless of the country in which an affiliate of an MNC earns taxable income,the same tax rates apply,then the tax due date doesn't matter. 
C) tax timing will even out over a reporting cycle,so there is no big deal here. 
D) none of the options 
A) the principle of tax equity might be violated. 
B) as long as,regardless of the country in which an affiliate of an MNC earns taxable income,the same tax rates apply,then the tax due date doesn't matter. 
C) tax timing will even out over a reporting cycle,so there is no big deal here. 
D) none of the options

Question 15

The idea that an ideal tax should be effective in raising revenue for the government but not have any negative effects on the economic decision-making process of the taxpayer is referred to as

Accepted Answer

A) capital-export neutrality. 
B) capital-import neutrality. 
C) national neutrality. 
D) none of the options 
A) capital-export neutrality. 
B) capital-import neutrality. 
C) national neutrality. 
D) none of the options

Question 16

Tax neutrality is determined by three criteria: which of the following doesn't belong?

Accepted Answer

A) Capital-export neutrality 
B) Capital-import neutrality 
C) National neutrality 
D) Income neutrality 
A) Capital-export neutrality 
B) Capital-import neutrality 
C) National neutrality 
D) Income neutrality

Question 17

A foreign subsidiary is

Accepted Answer

A) an extension of the parent and is not an independently incorporated firm separate from the parent. 
B) an affiliate organization of the MNC that is independently incorporated in the foreign country,and one in which the U.S.MNC owns at least 10 percent of the voting equity stock. 
C) either a minority foreign subsidiary (an uncontrolled foreign corporation)or a controlled foreign corporation. 
D) an affiliate organization of the MNC that is independently incorporated in the foreign country,and one in which the U.S.MNC owns at least 10 percent of the voting equity stock.In addition,a foreign subsidiary is either a minority foreign subsidiary (an uncontrolled foreign corporation)or a controlled foreign corporation. 
A) an extension of the parent and is not an independently incorporated firm separate from the parent. 
B) an affiliate organization of the MNC that is independently incorporated in the foreign country,and one in which the U.S.MNC owns at least 10 percent of the voting equity stock. 
C) either a minority foreign subsidiary (an uncontrolled foreign corporation)or a controlled foreign corporation. 
D) an affiliate organization of the MNC that is independently incorporated in the foreign country,and one in which the U.S.MNC owns at least 10 percent of the voting equity stock.In addition,a foreign subsidiary is either a minority foreign subsidiary (an uncontrolled foreign corporation)or a controlled foreign corporation.

Question 18

In the United States foreign-source income is taxed at the same rate as U.S.-earned income and a foreign tax credit is given against taxes paid to a foreign government.However,

Accepted Answer

A) the foreign tax credit is limited to the amount of tax that would be due on that income if it were earned in the United States. 
B) if the tax rate paid on foreign-source income is greater than the U.S.tax rate,part of the credit may go unused. 
C) both of the options 
D) none of the options 
A) the foreign tax credit is limited to the amount of tax that would be due on that income if it were earned in the United States. 
B) if the tax rate paid on foreign-source income is greater than the U.S.tax rate,part of the credit may go unused. 
C) both of the options 
D) none of the options

An overseas affiliate of a U.S.MNC can be organized

The underlying principle of tax equity is that

Transfer pricing can have an effect on how divisions of an MNC are perceived by the local banks.Which transfer price would leave a local affiliate that imports components from the parent with less impressive financial statements?

Tax neutrality

Using transfer prices "creativity" MNCs can

Fundamentally,there are two types of tax jurisdiction.

Assume that a product has the following three stages of production: Production Stage Selling Price 1 10 2 250 3 75 If the value-added tax (VAT)rate is 25 percent,what would be the VAT over all stages of production?

If U.S.taxing authorities did not limit the amount of the foreign tax credit to the equivalent amount of the U.S.tax

Capital export neutrality

Many countries have tax treaties with one another.These generally specify

The term "capital-import neutrality" refers to

There are three basic types of taxation that national governments throughout the world use:

A controlled foreign corporation (CFC)is

The organizational form of an MNC can affect the timing of a tax liability.This means

The idea that an ideal tax should be effective in raising revenue for the government but not have any negative effects on the economic decision-making process of the taxpayer is referred to as

Tax neutrality is determined by three criteria: which of the following doesn't belong?

A foreign subsidiary is

In the United States foreign-source income is taxed at the same rate as U.S.-earned income and a foreign tax credit is given against taxes paid to a foreign government.However,

International Monetary System

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

Filters

Exam 21: International Tax Environment and Transfer Pricing

An overseas affiliate of a U.S.MNC can be organized

The underlying principle of tax equity is that

Transfer pricing can have an effect on how divisions of an MNC are perceived by the local banks.Which transfer price would leave a local affiliate that imports components from the parent with less impressive financial statements?

Tax neutrality

Using transfer prices "creativity" MNCs can

Fundamentally,there are two types of tax jurisdiction.

Assume that a product has the following three stages of production: Production Stage Selling Price 1 10 2 250 3 75 If the value-added tax (VAT)rate is 25 percent,what would be the VAT over all stages of production?

If U.S.taxing authorities did not limit the amount of the foreign tax credit to the equivalent amount of the U.S.tax

Capital export neutrality

Many countries have tax treaties with one another.These generally specify

The term "capital-import neutrality" refers to

There are three basic types of taxation that national governments throughout the world use:

A controlled foreign corporation (CFC)is

The organizational form of an MNC can affect the timing of a tax liability.This means

The idea that an ideal tax should be effective in raising revenue for the government but not have any negative effects on the economic decision-making process of the taxpayer is referred to as

Tax neutrality is determined by three criteria: which of the following doesn't belong?

A foreign subsidiary is

In the United States foreign-source income is taxed at the same rate as U.S.-earned income and a foreign tax credit is given against taxes paid to a foreign government.However,

International Monetary System

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

Filters